It seemed like Argentina's best hope for getting out of default — a group of banks willing to buy over $1.3 billion of sovereign debt from the hedge fund creditors that sued The Republic for a decade and won.

But the deal, it seems has fallen through.

In a statement posted by Reuters, one of the hedge fund creditors, Aurelius Capital, said that the deal being forged by Deutsche Bank, JP Morgan, Citigroup and HSBC and others was simply not good enough to satisfy the group, which has been holding out for a 100 cent on the dollar payment on their investment.

"That engagement has convinced us that there is no realistic prospect of a private solution," Aurelius said in a statement.

"No proposal we received was remotely acceptable. The entities making such proposals were not prepared to fund more than a small part, if any, of the payments they wanted us to accept. One proposal was withdrawn before we could even respond. And no proposal made by us received a productive response."

Aurelius is part of a group of holdout creditors led by Elliott Management founder Paul Singer. They bought Argentine debt after the country's last default in 2001 for pennies on the dollar. When other investors took haircuts on that debt, the holdouts did not.

Instead they sued Argentina in a New York Court. The Republic refused to pay them as punishment for the holdouts' refusal to negotiate — the government called them vultures.

But the vultures eventually won. Argentina was ordered to pay the along with all of the other bondholders on July 30th. Argentina did not.

As a result, the country has been declared in default by the International Swaps Derivatives Association — The ISDA. An auction for the country's credit default swaps has been scheduled for August 21st.

On Tuesday, 8,000 Argentines took to the street to protest the Judge who ruled in favor of the holdouts. The Republic insists that it is not in default because it sent money to the bondholders who did restructure (not the holdouts). That money, however, is still sitting in the country's custodial bank, Bank of New York Mellon.

The Judge — Judge Thomas Griesa — would not accept any of the funds without all the funds.